Financial worries can sometimes give you the same feeling that you get when you jump onto a treadmill and increase the speed so much that you run completely out of breath. Except, since you are dealing with money, the feeling is much, much more stressful. While you can walk into a hospital and find out what is physically wrong with you, not many are aware of the fact that such an analysis can be done with their financial health as well. So, here we provide 4 top questions that will help you find out if your financial position is stressed, or not:

Funding a Sound Future

Yes, you coughed up about Rs 2 lakh for your son’s school admission and immediately you had to pay up some Rs 3.5 lakh for your father’s sudden illness and also manage the household and sundry expenses. If you had not created an emergency fund for all this and had to wipe out your savings, then it definitely is a point to ponder.

Ask yourself the following questions:

What are the situations in which I might have to spend a lot of money?
Am I prepared for it?
Do I have enough money for emergencies?
Am I adequately prepared to handle the future
If your answers for the above mentioned questions are not satisfactory, you need to start working towards creating an emergency fund. Set a target and try to achieve it as soon as possible.

Having said this, here are some points to help you cement a much more financially sound position:

1. Debt-to-Income ratio: Normally, if your debt is at the level of one-third (or lesser) of your income, it is considered to be healthy. To explain it in simple terms, let us assume you pay an EMI of Rs 15 per month towards home loan repayment, Rs 5 towards your car loan and Rs 5 towards credit card bills. This is a total of Rs 25 of debt repayment. If you are earning Rs 100 a month your debt-to-income ratio stands at 25 per cent. Now this is an ideal situation to be. If the ratio is between 30-40 per cent, it is still OK. If it crosses 50% it is alarming. It simply shows that you are having a hand-to-mouth expense. You really need to work towards reducing your debt and increase your earnings.

2. Planning post retirement life: Not all of us work like our parents who held a pensionable job. Most of us work in private sector where we will not get any kind of income after we stop working. If we need any kind of income after our retirement, it is completely left to us. We need to work on saving for our retired life. Put away money in any of the good pension plans, which will give returns to manage your medical emergencies, livelihood expenses and travel. Create a fund for retirement. Plan for a life ahead. I know of a couple who are not only completely financially independent at the age of 80, but are also supporting one of their sons who is going through bad times financially. Today, they are my role model when it comes to financial planning.

4. Get your Cibil score: Your Cibil score is a three-digit number mentioned in your Cibil report that can be bought from http://www.cibil.com. About 75% of the loans are granted to people with a Cibil score of over 750 on a scale of 900. Cibil report is a very detailed analysis of your financial health. It shows your repayment history as well as your credit worthiness. Ironically, many people are not aware that pulling out one’s own Cibil score will not lead to a drop in the score, where as they will let many other potential lenders to pull it out for them and then be surprised that their score dropped so much due to many enquiries. It is advisable to pull out your score at least once in six months to check your score and if any of your lenders have made any errors in updating your repayment. If there are errors, please raise a dispute on http://www.cibil.com and also let your lenders know about it.

So, take a pen and paper, note down all the thoughts that come to your mind to understand your financial health and work towards living a healthy and accomplished life. Save enough to tide over bad times and build assets enough to pass it on to your children.